India's IT industry rides high on ER&D and IoT

By Kavitha Srinivasa

Published Thursday, October 6, 2016

The Indian IT industry grew by 13 per cent last year and is set to enter its next wave of growth. Drivers in this new phase will be segments such as Engineering R&D (ER&D) and the Internet of Things (IoT), both of which are expected to take the IT industry up a couple of notches higher.

Already, ER&D has clocked up $22billion revenue in FY 2015-2016, while the IoT market in India stands at USD5.6 billion.

Engineering R&D (ER&D) is the fastest-growing segment within the IT sector due to the growing need for high-end engineering services. ER&D's success is predicated on the demand for re-engineering products to make them suitable for the contemporary domestic market, as well as scaling up to the global level. It points towards a future situation where Make in India products are for both the domestic and international consumers. As a result, many companies have positioned themselves as engineering analytics companies that perform as integrated players or domain players or niche players in the ER&D segment.

“ER&D has huge potential today as it has a significant role to play in the design scenario in India. ER&D is expected to grow to $35bn by 2020 and reach $70 bn by 2025,” said R Chandrasekhar, president of Nasscom, speaking at the eighth annual Nasscom Design and Engineering Summit. ER&D has raised the bar for IT companies, as it is already gaining currency in key markets such as Europe and the Asia Pacific region.

The Internet of Things (IoT), meanwhile, is at an interesting stage in India. Consumer and industrial applications are strong growth drivers, as IoT functions as a bridge between software and manufacturing. As of now, the IoT market has 200 million connected units and the ecosystem consists of around 120 organisations from across the value chain.

“India will be among the top three global exporters of IoT in the next 5-10 years. Industrial and consumer IoT applications are predicted to ride the next wave of IT growth in India,” said Kevin Ashton, who originally coined the phrase ‘Internet of Things’, and president-CEO at Onnit INC. This belief stems from the fact that IoT is being incorporated into consumer and industrial applications being utilised in verticals such as healthcare, automotive and manufacturing. There’s a lot that can be done in these segments. One obvious example of a successful IoT application is the smartphone: the IoT relies on network sensors and a smartphone typically has at least 10 network sensors.

‘Imagineering for the Digital Future,’ was this year’s theme for the Nasscom Design and Engineering Summit, which analysed the role that the IoT will play in creating digital utilities, especially in the areas of design and engineering that will drive the growth of future technologies in the country.

Nasscom, in collaboration with Deloitte, also launched a report on ‘IoT – Revolution in the Making’. This report states that the IoT segment is expected to grow across industries. Significant growth is expected in verticals such as utilities, manufacturing, automotive and transportation and logistics.

“The boundaries of IT are blurring in many areas like software, hardware and IoT. To a large extent, the blurring lines will impact design and engineering. This will lead to software-led manufacturing and software-led design. Consequently, design will be seen as an experience and not just as a means of creating a product,” Ashton said.